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Guide · India · regulation

SEBI’s retail algo trading rules: what they mean for a custom bot

By Ankur Parikh · Updated October 2026 · about 8 min read

In February 2025 SEBI issued a circular on the safer participation of retail investors in algorithmic trading. After its deadlines were extended, it applies to every stock broker from 1 April 2026. If you trade in India through your broker’s API, or want a custom bot built, here is what changed, in plain English, with links to the documents themselves.

General information as of October 2026, taken from the SEBI and NSE documents listed at the end. It is not legal, regulatory or investment advice. Your broker applies these rules to your account, so its terms decide the details.

The short version

  • Your broker is responsible. For algo trading through its API, the broker is the principal and answers for every algo order that passes through it.
  • No open APIs. Access only through a unique API key and a static IP the broker has whitelisted, with OAuth sign-in and two-factor authentication.
  • Every API order is tagged. Below 10 orders per second, your broker tags your orders with a standard identifier. Above it, your algo must be registered with the exchange through your broker and carry its own algo ID.
  • A tech-savvy investor’s algo stays in the family. SEBI allows such an investor’s registered algo to be used for their family (self, spouse, dependent children and dependent parents) but not for other investors.
  • Selling algos to others is a separate role. Algos offered to investors through brokers come from algo providers empanelled with the exchanges, and black box algos require the provider to register as a SEBI Research Analyst.

Who the rules are about

The framework sets out four roles:

  • The broker, which provides the API, runs the risk checks, gets each algo approved by the exchange and handles investor complaints about algo trading.
  • The exchange, which registers algos, issues algo IDs, supervises algo orders and can stop a specific algo with a kill switch.
  • The algo provider, a firm that offers algos to investors through a broker’s API. It acts as the broker’s agent and must be empanelled with the exchanges. SEBI does not regulate algo providers directly.
  • The investor, including what SEBI calls the tech-savvy retail investor: someone running an algo of their own through their broker’s API.

The static IP requirement

Brokers may no longer offer open APIs. Access has to come through an API key unique to you and from a static IP address your broker has whitelisted, so every order can be traced to the system and the person behind it. NSE’s FAQ says a client static IP is required for a tech-savvy investor using the API, and that such a client hosts the algo at their own end, on that static IP.

In practice, most home internet connections change their IP address from time to time, so a bot usually runs on a server or cloud machine with a fixed address, or on a connection where the provider has assigned a static IP. You then register that address with your broker, following its own process.

The 10 orders-per-second threshold

The circular asked the industry to set a threshold above which API orders count as an algo that needs registering. That threshold is 10 orders per second. NSE treats every order received through a client API as an algo order that needs tagging: below the threshold it carries a standard tag, and above it the algo must be registered with each exchange where it trades, through your broker, which passes on the exchange’s algo ID.

Most strategies an individual trader runs place a handful of orders a minute, far below the threshold. A system that fires bursts of orders, such as many legs at once across many instruments, should be designed with the limit in mind, or registered.

Order types your rules may need

NSE’s FAQ notes that, under its rules, algo orders are not permitted as market orders, and that immediate-or-cancel and market orders are not allowed through algorithmic trading in the commodity segment. If your strategy is written around market orders, the software may need to use limit orders instead, priced to fill. Your broker’s API documentation shows what it accepts.

White box and black box algos

The circular sorts algos into two kinds. A white box, or execution, algo is one whose logic is disclosed and can be replicated. A black box algo is one whose logic the user cannot see or replicate. An algo provider offering black box algos must register as a Research Analyst with SEBI and keep a research report for each one. Separately, SEBI told brokers in September 2022 not to refer to the past or expected returns of any algorithm, and not to associate with platforms that do.

What this means if you want a custom bot built

  • Plan where it runs. Budget for a server or cloud machine with a static IP, and register that IP with your broker before you go live.
  • Expect a proper sign-in. OAuth and two-factor authentication mean the system needs a sign-in routine that works with your broker’s process, often once a trading day.
  • Stay under the threshold, or register. Know your peak order rate. If the design needs more than 10 orders per second, registration goes through your broker.
  • Check order types. Use the order types your broker allows for API and algo orders.
  • Keep it yours. Under the circular, a tech-savvy investor’s registered algo is for their family only, not for friends or for sale.

Where Trade Vectors fits

We are a software developer. We build software that runs your own strategy, to your rules, on your own account. We have never registered or been empanelled with an exchange as an algo provider, we do not offer algos to the public through brokers, and we do not supply strategies, signals or tips. For the static IP, we help you choose the setup and guide you through it, and you register it with your broker. How your broker classifies and registers your algo is your broker’s decision under these rules; the strategy and every trading decision stay yours. More on how we work with Indian brokers on the Indian broker API integrationpage and for Zerodha on Kite Connect development.

Sources

Common questions

Do I need to register my trading bot with NSE?
Only if it places orders faster than the threshold of 10 orders per second. Below that, your broker tags your API orders with a standard identifier and no separate registration is needed. Above it, the algo must be registered with each exchange where it trades, through your broker, and its orders carry the exchange-issued algo ID.
Do I need a static IP for algo trading through my broker’s API in India?
Yes, if you run your own algo through your broker’s API. SEBI’s circular says brokers may allow API access only through a unique API key and a static IP the broker has whitelisted, and NSE’s FAQ confirms a client static IP is required for a tech-savvy investor using the API. In practice that usually means running the bot on a server or cloud machine with a fixed IP address.
Can I share my algo with friends?
Not under these rules. An algo registered by a retail investor may be used for their family only, which SEBI defines as self, spouse, dependent children and dependent parents. Offering algos to other investors is the role of exchange-empanelled algo providers working through brokers.
Is Trade Vectors an algo provider?
No. We are a software developer. We build software that runs a client’s own strategy, to the client’s rules, on the client’s own account. We have never registered or been empanelled with an exchange as an algo provider, and we do not offer algos to the public through brokers.
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